Can Prop C put a dent in San Francisco's homelessness epidemic?

Voters approved a ballot measure to tax wealthy tech giants and double the funding to combat the crisis.

San Francisco tech billionaire Marc Benioff spearheaded support of a tax that would pump millions into anti-homelessness initiatives, including the construction of direly needed affordable housing. Many of his peers — and the mayor — opposed it.
(Photo: Josh Edelson/AFP/Getty Images)

Late last month, a special United Nations report declared San Francisco's homelessness crisis to be in "violation of multiple human rights." In it, the report's author, U.N. housing expert Leilani Farha, briefly describes the treatment of homeless people living in Bay Area tent encampments as "cruel and inhuman" and notes that they've been denied access to "basic necessities."

As a "completely shocked" Farha elaborates to the San Francisco Chronicle: "If I could add, the other thing that just struck me ... but I'm sorry, California is a rich state, by any measures, the United States is a rich country, and to see these deplorable conditions that the government is allowing, by international human rights standards, it's unacceptable. I'm guided by human rights law."

The envoy's report, which also assesses encampments in Mumbai, Mexico City and Buenos Aires, comes at a curious time in which the residents of a very rich city in a very rich state recently voted to drastically crank up efforts to combat homelessness. An estimated 7,500 people are experiencing homelessness in San Francisco, although the real figure is commonly believed to be much higher, somewhere north of 10,000.

In the city's recent midterm elections, voters passed Proposition C, which adds $300 million to the city's homelessness budget, effectively doubling it. As reported by CNN, the measure creates additional funding for shelters, addiction rehabilitation, mental health services and homelessness prevention initiatives. And it's designed to come from a tax on the gross receipts of prominent — and prominently flush — companies.

But Proposition C was highly controversial. Although the tax would be a drop in the bucket — a mere .5 percent on gross receipts of over $50 million per year — for many of San Francisco's top tech firms, a slew of big names in the industry opposed it. You'd think a liberal-leaning cadre of tech titans would gladly assume the burden.

But this is San Francisco, a town where politics are complicated and where the tech industry wields immense sway. Saying "yes" to Prop C would seem like a surefire thing as it gives the city's tech billionaires — the ones facing a less than 1 percent tax bump — the chance to partake in act of socially conscious magnanimity. It seems urgent, necessary, a way to end a humanitarian crisis unfolding in their own backyard; an opportunity for safer, cleaner and more equitable streets.

So why then did even the mayor come out against it?

San Francisco Mayor London Breed, who has yet to reveal her own plan to combat homelessness, was against Proposition C, which would generate up to $300 million in funding for anti-homelessness measures. (Photo: Justin Sullivan/Getty Images)

A battle of tech titans over how to handle homelessness

Proposition C garnered national attention for the players it involved — and the large amount of money these players doled out.

In one corner was Marc Benioff — no small name around town. A San Francisco native, the Salesforce CEO — and newly minted Time magazine owner— is already associated with acts of philanthropy (the children's hospital in Oakland bears his name) and social activism (he's a prominent backer of March For Our Lives).

The Yes on C campaign was largesse-stuffed Benioff's latest pet project, one at which he threw $2 million of his own money — and $6 million in Saleforce cash, per CNN. As a result, he emerged as the ramped-up poster boy for the pro-Prop C movement with TV spots, talk show appearances and newspaper editorials to show for it.

Arguing that the city's fellow tech elite can afford to help remedy the "extremely embarrassing" homelessness epidemic, he stated his case, or at least part of it, in the Chronicle:

… we cannot let ourselves be scared by unfounded fears, such as the claim that Prop. C will drive away business and jobs. The city's Office of Economic Analysis found that over 20 years the effect on the local economy would be "small" — a mere 0.1 percent. In fact, businesses should be more worried about the risk to economic growth in San Francisco if we don't make a dramatic change. A national medical association recently canceled its convention in San Francisco citing safety and the quality of our streets. There's a danger tourists may stay away. In other words, Prop. C and reducing homelessness is good for business.

In the other corner was Jack Dorsey, the Twitter CEO and co-founder — he's also the founder and CEO of mobile payment processing company Square, which would be far more impacted by the tax than Twitter — who joined companies including Visa, Stripe and Lyft in opposition to Prop C. Dorsey donated $125,000 to the No on C campaign. (Unlike Zynga co-founder and chairman Marc Pincus, he did not go as far to call it "the dumbest, least thought out prop ever.")

I want to help fix the homeless problem in SF and California. I don’t believe this (Prop C) is the best way to do it. I support Mayor @LondonBreed and @Scott_Wiener’s commitment to address this the right way. Mayor Breed was elected to fix this. I trust her. https://t.co/EsxapfDvtI

Dorsey's outspokenness against a tax poised to alleviate homelessness in San Francisco played into his already unfavorable public persona. And not only did Dorsey donate generously to the No on C campaign, he also engaged in some light sparring with Benioff on — where else but —Twitter.

As Fast Company's Sean Captain details, "confoundingly circumspect" Dorsey is already perceived as a villain due to his slow and often indifferent response to pleas for Twitter to be scrubbed of accounts associated with Russian trolls, conspiracy theorists and those who use threats of violence to get their point across. (He recently announced Twitter was working to put the kibosh on the "like" button — a non-priority for most of the social media platform's frustrated users.)

Captain writes that "contempt for Twitter unites Americans" while "fewer people are likely to have a negative opinion — or any opinion — about Salesforce as about Twitter."

San Francisco's official homeless population is believed to be around 7,500 although other estimates place it as being nearly twice as high. (Photo: Josh Edelson/AFP/Getty Images)

A moment of reckoning for San Francisco's tech elite

Public personas aside, detractors of Prop C, which was conceived by the city's Coalition on Homelessness, had their reasons for opposing it.

Dorsey and others argued that throwing more money at the homelessness epidemic isn't what's needed, insisting that a radical policy change in how homelessness is tackled would be more effective. There also were concerns regarding accountability, or an apparent lack thereof. And according to CNN, the measure "doesn't give the mayor a chance to implement her own plan first," which is a key reason why newly elected Mayor London Breed is throwing her weight against the measure.

"We can't keep doing the same thing over and over and expect a new result," said Breed at a recent luncheon at which Benioff also appeared and made his case for the measure in his typically bombastic style. "It takes more than just money."

And she does have a point. Although the city's budget to fight homelessness has more than doubled over the last decade, even a modest dent in the number of people living on the streets in the city has failed to materialize. In fact, it's only grown.

Yet for Dorsey and other tech titans whose companies are technically considered to be "financial services" firms by the city, and, in turn, would be hit harder, their opposition ultimately came down to what they perceived as an unfair flaw in how the tax will be applied.

Writes Fast Company:

Dorsey is less worried about the tax hit to Twitter than to his other company, Square. Because it would be taxed on total income, which mostly goes straight to Visa, MasterCard, and other payment services that Square acts as a conduit for, Dorsey reckons this would require Square to pay twice as much per year (about $20 million) as Benioff's much-larger Salesforce.

Dorsey even floated relocation as being a possibility if the measure got enough votes to pass, which it did. Legions of workers employed by San Francisco's mightiest tech companies, Twitter and Square included, were outspokenly in support of the measure's passage and showed no hesitation in taking their CEOs to task.

Benioff and other Prop C supporters — notable ones include Cisco Systems CEO Chuck Robbins, comedian Chris Rock and House Minority Leader Nancy Pelosi — argued that more funding is needed for homeless services despite the fact that increases in spending haven't made a difference in the past. Benioff believes the city's most deep-pocketed companies, whether they're classified as "financial services" firms or not, should want to step up and play a role in making things better.

"What we were finding was we needed to go big and we needed to go bold, we needed to target the folks who would be most able to pay," Coalition on Homelessness Executive Director Jennifer Friedenbach told CNN, noting that the organization decided to strike while the iron was hot after the Trump administration lavished the country's largest, wealthiest corporations with generous tax breaks.

The Yes to C camp pointed out that the city's shelters are consistently full to capacity; a tech tax would, among other things, help to provide additional beds for those turned away. Rampant public drug use by homeless addicts has skyrocketed in recent months, magnifying the need for more aggressive and more accessible treatment options. And this, one would imagine, requires more funding.

Perhaps most appealing to voters — namely long-time residents as well as teachers, artists, service industry workers and anyone struggling with the city's egregiously high cost of living — who have watched an economically diverse gem of a city devolve into a place so expensive that it's basically unlivable, was the fact that half of the revenue from the tax would be used to fund anti-homelessness projects, which includes creating rent subsidies and constructing new affordable housing. And if there's one thing that San Francisco really needs, its more affordable housing.

As The Guardian wrote, Prop C evolved beyond being an altruistic, solution-oriented ballot measure into a moment of reckoning and a test — a test to see "whether the tech industry can find its moral compass."

Editor's note: This article has been updated with new information since it was originally published on Nov. 4, 2018.